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Why Private Equity

Why do you want to work in private equity?

How to Answer the Why Private Equity Interview Question

Why Private Equity is a commonprivate equity interview question you’ll encounter if you’re going through the interview process at a PE firm. It’s important to plan ahead so you’re not caught flat-footed and you have a compelling answer to the question. This guide will help you think about how to structure your answer.

 

Why LBO? From CFI’s LBO Modeling Course.

 

Example Why Private Equity Answer

Note: the answer below is from the perspective of an investment banking analyst or associate.

After working on several consumer internet deals, I’ve realized I’m extremely passionate about the sector, and I’d like to be closer to operating companies in the space. While I’ve enjoyed working on these deals in IB, I’d like to have a longer-term focus and believe the thesis for investing in consumer internet is still very strong. I believe the companies you’ve invested in here at PE Company Partners are great names and I’d like to be a part of building and growing this type of portfolio. While I thoroughly enjoy financial modeling work, I’d also like to get some modest exposure to the Boards of Directors and CEO or CFO of operating companies to create value.

 

What to Include in Your Answer

Based on the answer above you can probably identify a few key points that are strategically mentioned. Below is a list of the key points you should always include.

What to discuss:

  • Highlight that you have some transaction experience
  • Express an interest in a sector that the PE firm invests in
  • Position yourself as a long-term thinker or investor
  • Show you know what the PE firm has invested in
  • Express a desire to work with portfolio companies to create value

While all of the above are great things to talk about there are some issues, it’s best to stay away from. Even if the items on the list below are actually true for you (and many of them probably are), don’t mention them.

Don’t discuss:

  • Money
  • Hours
  • Lifestyle
  • Prestige

 

Different Paths to Private Equity

While the examples in this article have focused on investment banking (the most common path to private equity), there are other paths that should be mentioned as well.

Paths to PE include:

  • Investment banking
  • Consulting
  • Corporate development
  • MBA recruitment

Since investment bankers work closely with PE firms on their transactions, it’s by far the most common path into the industry.

Top tier consulting firms (McKinsey, Bain, BCG, etc. can also have opportunities, as well as people who worked on deals at public companies in the corporate development ground.

Finally, MBA recruitment can open the door to people form a wider range of backgrounds, though it’s rare to break into PE from something other than IB, consulting, or Corp Dev.

For more practice to the Why Private Equity interview question, compare this guide to our Why Investment Banking? Guide.

 

Additional Resources

Thank you for reading this guide to answering one of the toughest private equity interview questions. To learn more, and ensure you’re well prepared, check out these additional resources below:

  • Private Equity Interview Questions & Answers
  • Investment Banking Interview Questions
  • Free Financial Modeling Guide
  • FMVA™ Financial Analyst Certification

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!